Where is an Oil Shock?
Federal Reserve Board of St. Louis Working Paper No. 2011-016B
30 Pages Posted: 15 Jun 2011 Last revised: 21 Mar 2014
Date Written: June 1, 2011
Much of the literature examining the effects of oil shocks asks the question - “What is an oil shock?” and has concluded that oil-price increases are asymmetric in their effects on the US economy. That is, sharp increases in oil prices affect economic activity adversely, but sharp decreases in oil prices have no effect. We reconsider the directional symmetry of oil-price shocks by addressing the question - "Where is an oil shock?", the answer to which reveals a great deal of spatial/directional asymmetry across states. Although most states have typical responses to oil-price shocks - they are affected by positive shocks only - the rest experience either negative shocks only (5 states), both positive and negative shocks (5 states), or neither shock (5 states).
Keywords: State-Level Oil Shocks
JEL Classification: C31, E37, R12
Suggested Citation: Suggested Citation